Market Update US tsys higher, tsy curve 1bp flatter with the 10Y 3.21% (-2.8bps). Tsys higher with German bunds on risk-off tone with Euro equities weaker, Italy spds wider, crude oil continuing lower for a fourth day, prices have been moving steadily lower for the last two weeks on rising US production & inventories. Oct PPI expected to have risen 0.2% after a similar rise the previous month, with core prices decelerating to 2.5% y/y from 2.5%. GOCs higher in line with tsys – 10s consolidating in a 3bp range ~2.51% over the past week.
News headlines
Fed Holds Rates Unchanged Ahead of Expected December Hike (Bloomberg) The Federal Reserve left interest rates unchanged and stayed on course to hike in December despite recent jitters in financial markets and a critical president. The U.S. central bank said “economic activity has been rising at a strong rate” and job gains “have been strong,” acknowledging a drop in the unemployment rate, while repeating its outlook for “further gradual” rate increases in its statement Thursday following a two-day meeting in Washington.
Mueller’s New Boss Has Broad Powers to Throttle Trump Probe (Bloomberg) President Donald Trump’s new acting attorney general, Matthew Whitaker, now has almost unlimited authority over the Russia investigation led by Robert Mueller. Democrats have warned that Whitaker, a Trump loyalist and vocal critic of the probe, may fire Mueller, but he has many other ways to hamper, or even freeze, the investigation. Many of these steps may be largely invisible to the public and even lawmakers.
Stocks Fall on Oil, China Concerns; Dollar Gains: Markets Wrap (Bloomberg) U.S. equity-index futures fell for a second day as crude oil’s slide into a bear market and concerns over the health of China’s economy weighed on global stocks. The dollar continued its advance after the Federal Reserve stayed on track for a December rate hike. Mining and energy shares led a drop in Europe’s main equity gauge as most industrial metals fell, while disappointing forecasts from Richemont and Thyssenkrup AG also weighed on the index. Futures on the Dow Jones, S&P 500 and Nasdaq slipped. Oil extended a run of declines, heading for the longest losing streak on record. In Asia, financial shares performed particularly poorly following news that Beijing plans to set quotas for banks to pump credit into private companies. Treasury yields edged lower.
U.S. judge halts construction of Keystone XL oil pipeline (Reuters) A federal judge in Montana halted construction of the Keystone XL oil pipeline on Thursday on the grounds that the U.S. government did not complete a full analysis of the environmental impact of the TransCanada Corp (TRP.TO) project. The ruling deals a major setback for TransCanada Corp and could possibly delay the construction of the $8 billion, 1,180 mile (1,900 km) pipeline. The ruling is a victory for environmentalists, tribal groups and ranchers who have spent more than a decade fighting against construction of the pipeline that will carry heavy crude to Steele City, Nebraska, from Canada’s oilsands in Alberta.
Canada Pension Plan achieves 0.6 percent net return in second quarter (Reuters) The Canada Pension Plan Investment Board (CPPIB), Canada’s biggest public pension fund, said on Friday it delivered net investment returns of 0.6 percent in the latest quarter, impacted by adverse exchange rate movements. The CPPIB, which manages Canada’s national pension fund and invests on behalf of 20 million Canadians, said it had net assets of C$368.3 billion at the end of September, compared with C$366.6 billion three months earlier.
Disney earnings buoyed by theme parks, box office (BNN) Walt Disney Co. () delivered fourth-quarter sales and earnings that beat analysts’ projections, fueled by the entertainment behemoth’s movies and theme parks. Films such as “Ant-Man and the Wasp” and “Incredibles 2” more than doubled movie profit for the Burbank, California-based company. The company’s theme parks, meanwhile, benefited from the busy summer travel season, attracting more free-spending guests.
Martinrea misses expectations despite earning a record $36.4M in Q3 (BNN) Martinrea International Inc. () says it earned a record $36.4 million in the third quarter despite modest tariff effects and foreign exchange losses. The Toronto-based auto parts manufacturer says it earned 42 cents per share for the period ended Sept. 30. That’s unchanged from the prior year when its net income was $36.2 million. Excluding one-time items, adjusted profits rose for a 16th consecutive quarter, reaching $37.2 million or 43 cents per share, below analyst expectations but up from $36.3 million or 42 cents per share a year earlier.
Overnight markets
Overview: US 10yr note futures are up 0.133% at 117-30, S&P 500 futures are down -0.42% at 2797, Crude oil futures are down -1.52% at $59.75, Gold futures are down -0.63% at $1217.4, DXY is up 0.06% at 96.78, CAD/USD is up 0.32% at 0.7578.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.348% | 2 Year | 2.951% |
| 5 Year | 2.446% | 5 Year | 3.07% |
| 10 Year | 2.519% | 10 Year | 3.21% |
| 30 Year | 2.539% | 30 Year | 3.407% |
US Economic Data
| 8:30 AM | PPI Final Demand MoM, Oct 0.6% est 0.2% (0.2% prior) |
| PPI Ex Food and Energy MoM, Oct 0.5% est 0.2% (0.2% prior) | |
| PPI Ex Food, Energy, Trade MoM, Oct 0.2% est 0.2% (0.4% prior) | |
| PPI Final Demand YoY, Oct 2.9% est 2.5% (2.6% prior) | |
| PPI Ex Food and Energy YoY, Oct 2.6% est 2.3% (2.5% prior) | |
| PPI Ex Food, Energy, Trade YoY, Oct 2.8% (2.9% prior) | |
| 10:00 AM | Wholesale Inventories MoM, Sep est 0.3% (0.3% prior) |
| Wholesale Trade Sales MoM, Sep est 0.4% (0.8% prior) | |
| U. of Mich. Sentiment, Nov est 98.0 (98.6 prior) | |
| U. of Mich. Expectations, Nov est 87.2 (89.3 prior) | |
| U. of Mich. Current Conditions, Nov est 114.9 (113.1 prior) | |
| U. of Mich. 1Yr Inflation, Nov (2.9% prior) | |
| U. of Mich. 5-10 Yr Inflation, Nov (2.4% prior) |
Canadian Economic Data
There is no Canadian economic data for today.
Disclosure and Disclaimer
The following sources of information have been, or may have been, used partially or in their entirety to compile the herein provided CTI Capital Securities Inc. (“CTI Capital”) ‘Morning Comments.’ CTI Capital believes these sources to be generally reliable, however, as said sources are varied and from third parties, CTI Capital cannot guarantee the accuracy or completeness of said information: Canadian Press (CP); Bloomberg News (BN); Wall Street Journal (WSJ); Stone & McCarthy Research Associates (SMRA); New York Times (NYT); Financial Times (FT); Market News International (MNI); Globe and Mail; Associated Press (AP); CNW Group (CNW); Reuters; Business News Network (BNN); Market Watch; and others.
Ivan Greenstein, Stephan Buu, Hugues Savard
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230